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GEA Group 2018 EBIT Down

Germany's GEA Group AG (GEAGF.PK,GEAGY.PK) reported that its EBIT for fiscal year 2018 declined to 259.8 million euros from 380.2 million euros last year.

Order intake was 4.92 billion euros, compared to 4.75 billion euros in the prior year.

Revenue was 4.83 billion euros, up from 4.60 billion euros last year.

The Supervisory Board and Executive Board will propose that the Annual General Meeting approve payout of an unchanged dividend of 0.85 euros per share for the 2018 fiscal year. In doing so, GEA will go beyond its fundamental target of distributing 40 to 50 percent of group earnings, thus underscoring its unaltered belief in its operational strength.

For fiscal year 2019, GEA expects its revenue moderately below the previous year's level, an EBITDA before restructuring measures between 450 million euros and 490 million euros and a ROCE between 8.5 to 10.5 percent.

The company's business is currently divided into two business areas: Equipment and Solutions. This is to be replaced with a divisional structure. The change is designed to enhance transparency and facilitate the management of individual businesses. A further aim is to reinforce managers' entrepreneurial responsibility. To date, P&L responsibility has not been adequate below the Executive Board level.

The new structure is to be finalized and key responsibilities defined by the end of June, the company said.

On March 13, GEA's Supervisory Board and Niels Erik Olsen, the Executive Board member up to now responsible for the Business Area Solutions, reached a mutual agreement concerning his immediate departure from the company. Stefan Klebert will take on responsibility for the Business Area Solutions in addition to his duties as CEO. As no successor will be nominated for Olsen's position, the Executive Board will be streamlined from five members to four.

Another focal point of the realignment concerns procurement. The entire Group's procurement volume amounts to around 2.5 billion euros. The goal is to achieve economies of scale by combining the three separate procurement organizations into a strong single unit and by reducing the number of suppliers.

GEA said it will combine its production organizations, which were previously geared to its two business areas. That will create a sound basis for accelerating optimization of the production network, a process that has already begun. At present, the network is heavily slanted toward Europe and is, to some extent, too small-scale. The medium-to-long term goal is to enhance proximity between production plants and sales markets.

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